Russian rouble firms towards 60 vs dollar, stocks up
In this environment, buyers will take a wait-and-see approach and keep an eye on stocks in case they go lower," BCS Global Markets said in a note. Market activity could increase later this year when the Moscow Exchange opens the door for investors from so-called friendly countries.
The rouble firmed towards 60 against the U.S. dollar on Tuesday, retaining support from capital controls and high prices for oil, Russia's key export, while stocks inched higher as the admission of investors from designated "friendly countries" was delayed.
At 1400 GMT, the rouble was 0.6% stronger against the dollar at 60.37, trading in a range between 59 and 62 for the sixth day in a row. The rouble reached a new equilibrium, retaining support from capital controls and Russia's strong trade surplus that ensures inflow of export-related revenues, Raiffeisen Bank analysts said.
In the first seven months of 2022, Russia's current surplus more than tripled compared with a year ago to $166.6 billion. Closer to the year-end, the rouble is expected to consolidate at levels of 65-70 to the greenback, they said.
Against the euro, the rouble firmed 0.9% to 61.67 , well above the record low of 132.42 it hit days after Moscow sent tens of thousands of troops into Ukraine on Feb. 24. The rouble is the best-performing currency http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html so far this year as it received a boost from the capital controls Russia imposed to shield its economy and the financial system from sweeping Western sanctions.
However the rouble may gradually weaken in the near term given the lack of news triggers, and the fact that the monthly tax payment period which usually boosts demand for the currency will only start later in August, Promsvyazbank analysts said in a note. On the stock market, the dollar-denominated RTS index rose 1.6% to 1,101.0 points, while the rouble-based MOEX Russian index added 1% to 2,110.2 points.
Players are keeping an eye on conversion of depositary receipts (GDRs) of Russian companies that were traded on foreign exchanges and held in Russian depositories. The conversion of GDRs into shares on the Moscow Exchange will begin on Aug. 15 in a bid to reduce foreigners' control over these companies amid Western sanctions. "An important date, 15 August, is approaching with cancelling of depositary receipts and risk of overhang from sellers. In this environment, buyers will take a wait-and-see approach and keep an eye on stocks in case they go lower," BCS Global Markets said in a note.
Market activity could increase later this year when the Moscow Exchange opens the door for investors from so-called friendly countries. It was supposed to do so from Monday, but said late last week the ruling would only apply to the derivatives market, not the main stock market.
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